Reference no: EM132630706

Question - You are a new hire at a local bank. On your first day, your boss comes to you with a problem. Due to a screw up in the legal department, new loan documents didn't include the requirement for an audit of the client's financial statements. This caused a bunch of minor inconveniences, as most clients are willing to submit audited financial statements, except one.

Stark Industries, a maker of widgets, refuses to have an audit due to the cost. Tony Stark, the CEO, believe that the audit does not add anything of value and is a waste of money. Your boss manages to convince Tony to have a third party performed an Agreed Upon Procedures (AUP) Engagement if problems are discovered by the Bank.

Your boss wants you to write up a memo for the client's files, detailing why having someone outside the company auditing the information is useful, and to provide a list of problems with the financial statements so that you can convince Tony to have the AUP Engagement performed.

Provide your boss with a memo with a memo detailing the following:

1. Why having an independent third party performing an audit of financial statements is important.

2. A road map for the agreed upon procedures detailing the following (at least four):

a) The Account and Assertion

b) What went wrong.

c) Procedure to test or correct the problem.